The recent developments in the Biosimilar marketplace are potentially positive for pharmacies able to acquire and bill for biosimilars and navigate complex State regulations. Increased competition in biologic products is expected to improve availability and lower acquisition costs for specialty pharmacies, bolstering their bottom line and providing patient choice of drugs and pharmacies.
But first, what are biosimilars? While most drugs are chemical compounds that are easily copied by generic drug manufacturers, biologic products are manufactured in or extracted from biological sources and are not subject to copying in the same fashion as other drugs. Since generic copies of biologic products are typically unavailable, biologics have remained expensive and limited in availability well after patent protection has expired. Biosimilars are the answer to this issue. Biosimilars are biological products that are “highly similar” to another brand name approved biologic product (also known as a reference product). To qualify as highly similar, data must show that that the biosimilar has no clinically meaningful differences in terms of safety and effectiveness from the reference product.
Earlier this year, the FDA approved the first biosimilar product, Novartis’ Zarxio, as “highly similar” to Amgen’s blockbuster drug, Neuprogen. According to Evercore ISI, 11 other biologic drugs will face biosimilar competition in the next several years.
When Biosimilars become available in the marketplace, they are widely expected to create price competition and availability in a space where big pharmaceuticals companies have historically set high prices and often limited distribution to a select group of pharmacies. While plan sponsors and patients are clear beneficiaries of price competition, this increased availability of substitute products could also benefit specialty pharmacies. Pharmacies typically blocked from supplying specialty drug products (through Limited Distribution Drug (“LDD”) channels) are expected to gain access to biologics. Until biologic manufacturers can figure out the “rebate game” with PBMs, biologic product manufacturers are unlikely to make these products LDDs. Increased availability of drugs and lowered acquisition costs could combine to benefit specialty pharmacies and patients.
Still the road to dispensing biosimilars is not without hurdles. New regulations are sure to follow and state regulations are often not uniform across the fifty States. The differences between generic chemical drugs and biosimilars caused many States to update substitution laws and other regulations that will impact biosimilar dispensing. For example, several states require an affirmative act by pharmacies to notify prescribers of the substitution. Additionally, nuances in FDA biosimilar approval has created two possible classes of biosimilar products, those that are substitutes for the related brand biologic products and those that are similar, but not “automatically” substitutable. Further, regulations not yet formalized by the FDA create uncertainty in biosimilar naming, interchangeability, and clinical testing requirements. The final hurdle for any Specialty Pharmacy will be whether the biosimilar is characterized by the PBMs as “specialty” and, consequently, if the PBMs attempt to limit access to pharmacies that have gained entrance into restricted specialty pharmacy networks.
Biosimilars present an enormous opportunity for pharmacies willing to step up to the challenge. Frier Levitt can assist your specialty pharmacy in gaining access to restricted specialty pharmacy networks and mastering complex state regulations. Contact one of our attorneys today.
